Housing Market Improving Evidenced at Home Depot

August 24, 2012 / Russell Legato, Residential Property Analyst

One sure sign that the housing market improving is having an effect on the economy is the increased spending at stores such as Home Depot. This largest retailer of home improvement products reports customer spending increased in the second quarter. Paint, faucets for kitchens and bathrooms were among the products people purchased to improve their houses. That’s what brought sales up by 12 percent.

Housing Market Improving Evidenced at Home Depot

It is noted by Frank Blake, CEO and Chairman of the Atlanta based Home Depot that among the highest sales increases in their many stores were Florida and California. Since they were affected badly by the real estate crisis, their improvement is an indicator of a successful recovery. There is much progress to be made. However, shares of Home Depot stocks increased by $1.89 per share making the cost $54.71 as of last Tuesday.

There are so many products sold that are corollary to the home improvement and real estate industry. Renovations and remodeling projects require everything from floor tiles to ceiling fans and everything in between. Paint, roofing tiles and solar panel installations are a few others. Then there is the landscaping. Trees and flowers are purchased as well as mulch and wood chips and all kinds of gardening tools. The list is endless.

Home Depot reports a 2.1 percent increase in sales in those stores open for one year or more. Overall, that figure was 2.6 percent. Approximately 20 percent of all sales in the United States are for $900 or more (in each total purchase). They increased 3.4 percent. Another 20 percent of all sales are for a total of $50 or less each. They slipped a little (0.7 percent).

Big ticket items that were not in demand in 2010 are now. These are items such as lawn mowers many of which are being put on credit cards.

Another factor in increased sales is the fact that construction companies are making those $900 or more purchases more frequently. This is an indication that homes are being built and remodeling projects on existing homes are increasing. Larger renovations are starting to pick up. People are adding a new recreation room or home theater or second bathroom in the home.

Home Depot expects to be less frugal with their operating expense budget in the future. Expenses had to be curtailed during the recession. Now they plan to add call centers. The expense incurred when customers use credit card has an upper limit now. The banks can only take up to a specified amount from the retailers when customers pay for a purchase with a credit or debit card. It is good for all realtors and retailers to see the housing market improving and being profitable once again.

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